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PUB tackles proposed, massive power rate increase

The  Holyrood generating station, which supplies power to the St. John’s region.
The Holyrood generating station, which supplies power to the St. John’s region.

Enjoy your power rebate? Now, how about an average rate hike of 18.6 per cent on Canada Day? And that’s not the Muskrat Falls bill.

In recent weeks, a request for a sudden and massive hike in power rates has been before the Public Utilities Board (PUB), as a result of a Newfoundland and Labrador Hydro application, resulting in back and forth involving Newfoundland Power, the island’s industrial customers and the regulator.

The PUB did not approve the increase, but also hasn’t written off a hike during the year.

There are mitigation measures now being discussed.

In an order issued May 1, the Board asked for more information and a new application from Hydro. For now, what rate changes might actually hit customers in 2017 remains uncertain.

The Telegram is reviewing documentation related to the case, but the vast majority of the increase is tied to the annual rate stabilization plan adjustment. A rate change is typically brought in July 1 each year to address fuel usage and price, and ratepayers have benefitted in the last two years from the adjustment.

But the adjustment does not run 10 per cent in either direction in a single year, until possibly this year.

“Due primarily to the large fluctuations in the price of fuel, the annual RSP adjustment is forecast to result in an electricity rate increase as large as 18.1 per cent. As a result of the magnitude of the increase this year, the PUB requested that Hydro look at options for potential rate mitigation,” Hydro stated, in a response to questions Tuesday.

The utility is now considering alternatives, but those proposals will not eliminate an increase.

“Hydro recognizes and understands that any increase in electricity rates impacts our customers, however the cost of fuel is volatile and as long as we rely on oil-fired generation at Holyrood, customers will continue to be impacted by this electricity price uncertainty,” the Hydro rep stated.

Whatever is decided, the rate increases flow through to Newfoundland Power customers.

It’s why the Consumer Advocate issued his objection to the hike on the table in recent weeks.

“To burden ratepayers with an (average) 18 per cent rate increase, which is well outside the normal range for the rate stabilization fund adjustment, is unacceptable,” Dennis Browne told The Telegram. He gave credit to Newfoundland Power, for an early proposal of a potential offset, but none to Hydro.

“Hydro has been placed on notice that any extraordinary increase in customer rates, such as the one proposed by Hydro in this instance, will be vigorously opposed,” he said.

The operation of the rate stabilization plan has become much more complicated than when it was first introduced. Browne has suggested in his filings to the PUB that it be abandoned in its current form, and a new annual adjustment be considered.

In sending Hydro back to the drawing board after submissions on the over 18 per cent average increase, the PUB included a note on consideration for customers. “While Hydro acknowledged that the (proposed) rate increase is material it did not address the potential for rate shock and did not provide any alternatives to address the magnitude of the impact,” the May 1 decision stated.

In the latest back and forth, Hydro did raise concern around “intergenerational equity,” when it comes to putting off rate increases, given additional rate hikes coming down the pipe, to cover the Lower Churchill hydro project and other infrastructure. 

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